Sunday, February 01, 2009

Comment: Gloom, indecision dominates at Davos

The five-day World Economic Forum in Davos, Switzerland ended Sunday with little light shed on how to tackle the world economic crisis.

"No one seems to have a clear understanding of how big this crisis is and what we need to do to get out of it," Kishore Mahbubani, dean of the Lee Kuan Yew School of Public Policy in Singapore, told the Associated Press. "My own view is that you really need to do a fundamental reexamination of the whole global system to see what went wrong, and nobody here is yet ready to ask these kinds of fundamental questions in Davos."

The forum will initiate a "Global Redesign Initiative" aimed just at restructuring the financial system that melted down in dramatic fashion last year.

Naturally the United States, that set up the model for the financial markets, particularly the derivatives market, took most of the blame for the global recession. Nobody, not even the most respected experts, seems to fully understand how many trillions of dollars it will take to cover the derivatives market debt.

Nobel Peace Prize winner Muhammad Yunus, founder of the microcredit system, saw an opportunity though in the economic despair. "This is the greatest moment we have because things need to be changed, it's as simple as that. We don't want to go back to the same normalcy that we're coming from. We will create a new normalcy which will stay and keep on moving and change the world," Yunus said.

Unfortunately, the architects of the current problems still hold the key posts in the U.S. government and at the Federal Reserve Bank. The nations of the world can no longer just "follow the leader." They need to take up their respective responsibilities and thoroughly review any suggestions for a global economic "redesign."

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